Related

While all around Europe citizens are taking to the streets to protest their governments' plans for budget cuts, pledges to curb spending and balance the budget have proven to be vote winners in the Netherlands. In Wednesday's general election, the Dutch gave their strongest support to the pro-business Liberal Party (VVD) and its stark message of austerity.

In the midst of a brutal economic downturn and a bruising market buffeting for the euro, Dutch voters turned away from the traditional hot-button election issue of immigration to focus instead on how candidates proposed to nurse their nation's public finances back into health. The result was a surge in support for the Liberals, led by the telegenic 43-year-old former Unilever executive Mark Rutte, whose belt-tightening mantra was underlined by his having predicted an economic crisis as early as January 2008. On Wednesday night he hailed "a fantastic evening" for his party. "We are the party for everyone who wants to make something of their lives," he said. (See pictures of the global financial crisis.)

But the popularity boost didn't translate into an outright win, and the VVD is now in the process of trying to form a coalition. As leader of the biggest party in the 150-seat Dutch Parliament, Rutte will aim to head up the government, but he still has a way to go before he can become the first Liberal prime minister since the World War I. Wednesday's vote delivered one of the most fractious results in Dutch election history: with 31 seats  20% of the vote  the Liberals will still need at least two other parties as allies if they are to form a coalition.

The question for Rutte is whether he decides to work with the election's other big winner, Geert Wilders, who heads the Islam-bashing, anti-immigration Freedom Party (PVV). The Freedom Party, taking part in only its second national election since being founded by Wilders in 2005, secured 16% of the vote, jumping from 9 to 24 seats. Wilders, the bogeyman of Dutch politics, called it a "glorious day", and demanded to be included in any ruling coalition. "They cannot ignore us. We want to be taken seriously," he said. "One-and-a-half million Dutch voted for us and for more security, less crime and less Islam." (See more on Wilders.)

The success of both Rutte and Wilders  and their respective agendas  represents a relatively new phenomenon in Dutch politics, according to Paul Scheffer, professor of urban sociology at Amsterdam University. "Voters feel uncertain and uneasy, and this applies both to economic and cultural issues," Scheffer says. "The Dutch traditionally were able to adapt to the world. But there is a feeling now that they are exposed to globalization and no longer protected by the government."

Given those concerns, it's surprising that the Wilders effect wasn't as strong as many had expected. When the election was called in February, the Freedom Party was riding high in the polls, and Wilders' gripes about Islam and immigration were expected to dominate the campaign. But instead voters stuck to economic issues. "The debate moved from Muslims and headscarves on to more profound and constructive issues like mortgages and tax deductions," says Adriaan Schout, director at the Clingendael Netherlands Institute for International Relations in The Hague. "People realize that the economic situation is much more serious than anyone thought, and there is a large consensus that big cutbacks are needed."

With a budget deficit currently running at 6.6% of GDP, and debt at 62.2%, the Netherlands has one of the European Union's soundest public finances (Greece's deficit, in comparison, is estimated at 13.6% of GDP and its debt is at 115.1%). But the euro crisis has so shaken voters that they have placed austerity at the heart of their concerns. Rutte went further than anyone else in his aggressive cost-cutting promises, saying he would slash public spending by about €45 billion ($54 billion) over the next four years and by €20 billion ($24 billion) each year from 2015. That would mean higher taxes, raising the retirement age, canceling a number of generous social programs, eliminating development aid, reducing the military by half, firing thousands of civil servants and bringing the budget into surplus within two terms. (See if German austerity will help or hurt the global recovery.)

The most obvious allies for the Liberals for such a drastic program would be the conservative Christian Democrats (CDA), whose leader, Jan Peter Balkenende, was the prime minister in the outgoing coalition. But after eight years of being the largest Dutch party, the CDA suffered a crushing defeating on Wednesday, sliding from 41 seats to 21. Calling the results "very, very disappointing," Balkenende stepped down as a party leader.

The CDA's erstwhile coalition partners, the Labor Party (PvdA) also lost ground, but less dramatically: they fell from 33 to 30, just one MP less than the Liberals. The Labor leader, former Amsterdam mayor Job Cohen, represents a more familiar Dutch tradition of tolerance and openness. A Jew who has reached out to orthodox Muslims, he was the first mayor in the world to perform a civil gay marriage in 2001. Cohen has accepted the need for budget cuts, but on Wednesday told supporters he would do all he could to make sure the Netherlands continues to be a social and decent country.

If he rejects Wilders and his Freedom Party, Rutte could work with Labor's Cohen, but he would still need at least one other party to join them. That could be either the CDA under Balkenende's successor, or the left-wing Liberals of D66 and the Greens. (See more on the Far Right in Europe.)

But whatever the solution, it would mean a precarious coalition with fierce in-built tensions. "The political landscape is hugely fragmented, and it is unclear what this election result means," says Rob de Wijk, director of The Hague Centre for Strategic Studies (HCSS). "The economic crisis has made the country preoccupied with itself, and that is a big problem: if you want to restructure your economy, you have to be outward-looking."